Jsedirect With Simon Brown

Share buybacks and stock compensation, the bad and the ugly Share buybacks are good right? The company uses their free cash to buyback shares which reduces the number of remaining shares such that each share has a higher claim over future profits which adds to their value. Further they're tax efficient in that paying dividends results in dividend tax. BUT; Firstly, in cyclical stocks you need to be buying back at lows, not highs and the companies usually have no free cash at lows, so either they don't buy back or they do so at highs when they have the cash. Horrid value destruction. Secondly, some companies are buying back but also issuing new shares to staff, at times at a rate faster or similar to what they're buying back. This is then effectively an underhand salary to staff. This is especially an issue with large tech stocks, see examples below. Thirdly, new share issues are considered non-cash, but ultimately they are cash as you gave somebody real shares that have future claim on profits. Fourthly, oft

The problem with telcos I have long said that telcos such as MTN (JSE code: MTN) and Vodacom (JSE code: VOD) is that they are essentially utilities and should be priced as such. But actually that statement is wrong. Sure voice (who still calls using voice?) and data are utilities like water and electricity. BUT the telcos have a problem, capex. Yes we're using more and more data but prices keep coming down, I recently bought an effective 80 GB for little over R400. And all that while capex is increasing. They're busy rolling out 5G but as soon as that's done it'll be tine for 6G. It's a never ending tread mill. Simon Shares Brent oil is weak and telling us a story about global growth Clicks (JSE code: CLS) vs. Dis-Chem (JSE code: DCP) results contrats. REITs unloved and cheap, time to buy? Simon Brown

Updating minister Gordhan's portfolio Public Enterprises Minister Pravin Gordhan has declared his holdings, we reviewed his portfolio last time in April and there are some interesting changes, he is fairly active in buying and selling. Most notable is the total value is up almost R2million? Simon Shares Purple Group* (JSE code: PPE) have introduce a platform fee. Certain behaviours will see the fee waived and I speak to Charles Savage on my MoneywebNOW show Thursday morning. Renergen* (JSE code: REN) results show a loss, LNG output for phase 1 ±40% and helium on stream by year end. Phase 2 has been split into two parts and the conditions of the $750million is not a Nasdaq listing but rather a capital raise with a listing for part two of phase 2. MTBPS was bleak as expected and we could see some tax hikes in February. Gold almost had its highest ever monthly close for October. * I hold ungeared positions.

Living small, an update Back in 2017 Simon and his wife down scaled into a small (relative) apartment and also got rid of one of their cars again. As they now move again Simon updates in their experience of living small. Simon Shares Famous Brands (JSE code: FBR) results. Revenue up and HEPS lower. TigerBrands (JSE code: TBS) loses their CEO and posts a decent trading update. Jamie Dimon said central banks’ forecasts have been “100% dead wrong”. Sasol (JSE code: SOL) trading update, lots of movingp arts, but the market not trusting management? That said stock is cheap and we're seeing some upward movement on price.

hh Renergen* (JSE code: REN), now what? Late September the price started breaking down and end September a Tweeter started posting about them. I'm not going to defend every point raised, that's the job of the company and after an initial poor response, Monday saw a more detailed SENS. Paid research. Ultimately all research is paid for. Sometimes it is paid for by the company and here the issue is disclosure. I think the bigger issue is a complete lack of disclosure in our industry. By FinTwit or the fancy analysts, albeit assume the latter is always talking their book, which is fair. Perhaps the biggest point from this last few weeks is; Know your stock. Like really know it. When I buy a new holding I put together a lis of 3-5 things I like and 3-5 risks. I may be wrong on any of them, but it makes me do the digging and at least have a decent view of both sides of the story. Careful of "new" news. It may be accurate (or it may not), but it also often lacks detail which maters. This was mostly the case with

There are bold traders. here are old traders. There are no bold and old traders.Bold traders What is a bold trader and why do they die out? Wild swings for the fence No position size management Stop loss for losers Enter outside of system and process Simon Shares Famous Brands (JSE code: FBR) trading update, Spur (JSE code: SUR) really has taken the mantel of best QSR/restaurant business on the JSE. Very strong US jobs and upward revisions from previous month. But wage inflation only 0.2%. So market was confused but ended happy. Tuesday also saw US 10-year yields moving lower which excited everybody. But I am sceptical, this is only one data point and I think the FOMC hikes at their 31 Oct/01 Nov FOMC meeting. Water crisis. This is going to hurt and it not going away any tine soon. Which businesses get hurt most? We found a US government bond ETF paying monthly.

US 10-year yields highest since 2007 Bad news all round (unless you buying). Almost 40% of US government debt expires in the next four years and will be re-issued at markedly higher rates, 9x higher in some cases. Money flowing into US bonds for yield. This sees less money entering the stock market Sees a stronger US$ (check DXY strength, all currncies weaker against US$) Hits valuations lower as higher rates makes cash worth less in the future, but so far the market has ignored this fact. Simon Shares The Top40 closed negative for the year on Tuesday. This after being almost +12% in late January and trading at all-time highs. Top40 close 26 September 2023, negative YTD Fed and SARB hold rates steady - but very hawkish. StatsSA "South African hotels recorded an occupancy rate of 47.3% in July 2023, up from 45.8% in June and 45.5% in May.". But still below the ±50% pre-pandemic occupancy levels.

Simon Shares Shoprite* (JSE code: SHP) results "2023 was extraordinary". Chart by Koyfin 15% discount for first 2 years Richemont (JSE code: CFR) getting interesting, let's see if support holds. [caption id="attachment_40005" align="aligncenter" width="849"] Richemont weekly ~ 07Sep23[/caption]Nampak (JSE code: NPK) nil paid letters are trading, code NPKN. Remember either sell them or take up the rights. Calgro M3* (JSE code: CGR) trading statement, HEPS +20% for the first six months ending August. The latest PMIs out of Europe all quite weak, not only declining from the previous month, but lower than the preliminary numbers from the middle of last month Profit from the Longevity Boom with Healthcare ETFs The tax ABCs of buying a property Simon Brown * I hold ungeared positions.  

Simon Shares Bidcorp - excellent AvdTech* - really good, stock at all-time highs Stadio - good student growth Motus - poor HEPS, good dividend Woolies* - not bad, but wow only got R1.1billion for David Jones Sasol - impairments galore Adcock Ingram - capacity utilisation is weak Aspen - good second half KAP - tough out there Super Group - strong numbers * I hold ungeared positions.

dd Spur and Calgro M3, two stocks I have been watching and both have seen their prices break higher. Calgro M3 (JSE code: CGR) builds lower income housing and after a few troube years os back on track. Latest results were for year ending February 2023. PE ±2.5% Cash on hand ±R172million, market cap is ±R440million NAV 951c (including unused land valued at ±30% of NAV) while share price 365c Spur (JSE code: SUR) sells fast casual food and the pandemc hurt. Latest results have some base effect as they are for six months ending June 2023. Forward PE ±5x Dividend yield ±14% Spur remains their key brand. Simon Shares Thungela (JSE code: TGA) results saw HEPS down 67% which is the same as the price of coal over the last year. UBS cuts China's GDP growth forecast for 2023 from 5.2% to 4.8% CoreShares ETFs name change to 10X. Local inflation for July was 4.7%, a really strong number and better then the market expected, this even as administrative prices kicked in during July. Transport was negative fo

  China in trouble as economic data keeps on disappointing? Chinese data keeps disappointing, every since the -7.5% export data from April. Expected was a strong rebound after they lifted zero-covid restrictions. But not happening. Just this week; Among 70 Chinese cities, 49 saw a fall in new home prices month-on-month in July from 38 cities the previous month. China suspends youth unemployment data after record high. Over the last decade they’ve halved the number of indicators they publish. Retail sales lower Industrial production lower fixed asset investments lower Simon Shares  MTN (JSE code: MTN) results had an interesting update on their fintech business. reports were they would list it, but for now Mastercard has taken a stake valuing the business at ±R100billion while MTN market cap is ±R250billion. Satrix is shutting down three of the ETFs they got from Absa. They are the Volatility Managed ETFs. They two small and not core to teh Satrix startegy. If you hold them on close 29 September you'll be p

  Aspen looking cheap? Aspen (JSE code: APN) announces a acquisition in Latin America for US$290m on a price/sales of ±3x and PE of ±5x. This is a classic Stephen Saad sort of deal. Strong cash generation to pay down the debt. After having gone quiet when the balance sheet case under serious pressure (with debt of ±R50billion) Aspen is back? Chart looking good for a break higher. Forward PE of ±12x is below 1 standard deviation over last twenty years and looking cheap. Charts by KoyFin, click here for 15% off a two year subscription. Simon Shares FOMC raised 0.25% as expected last week. In the press conference Powell suggested no recession coming and with inflation for June at 3% has the fed successfully threaded the inflation needle without any serious repercussions (so far)? MTN (JSE code: MTN) trading update, 169c cost for 'currency moves' likely the Nigerian Naira devaluation. Prosus (JSE code: PRX) agrees to sell part of PayU to Rapyd for $610m. They’ll keep the Indian market part of the business. How

  Central bakers have very few tools to achieve their mandates around inflation (and in some cases also protecting a currency and aiding GDP growth). Interest rates have a blunt lagged effect and their only other tool is what they say and we need to understand this central banker speak. Last week it was the South African Reserve Bank MPC rate announcement that left prime unchanged for the first time since November 2021. The vote was close and the governor spent a lot of time saying they had not finished hiking, this was just a pause. The Federal Reserve FOMC has been saying the same about pausing before more hikes. But any hikes will surely be data dependent which is what they always say. So the threat of more hikes is central bak speak for don't get too excited. Simon Shares Shoprite* (JSE code: SHP) trading update shows just why they are the best food retailer in South Africa, even probably the world. This as they had to spend R1.1billion on diesel for the 52 weeks. This will hurt margins, but they're sti

As expected Local CPI for June came in at 5.4%, lowest in twenty months and well within the 3%-6% target range from the South African Reserve Bank. Yes base effect as June last year was the first +7% inflation print of this cycle.  When do we start talking rate cuts? Truthfully not yet, a pause would be nice eve as the gov always targets 4.5% not the range. Simon Shares MPC is Thursday, I expect no raise and can we start talking about rate cuts yet? USDZAR currency forecasts from Goldman Sachs: End 2024: 16.00 End 2025: 15.00 End 2026: 14.00 Decent UK inflation as it dropped to 7.9% for June vs. expected 8.2%. But still highest in Europe. Italy 6.9%, Germany 6.4%, Netherlands 5.7%, Euro area 5.5%, France 4.5% & Spain 1.9%. Pick n Pay (JSE code: PIK) very poor update. "SA sales declined 0.3% (0.0% like-for-like)" while "internal selling price inflation" was 9.5%, so they went backwards at a fairly alarming rate ArcelorMittal South Africa (JSE code: ACL). Monday CFO quit after just two weeks and then Tu

Simon Shares US inflation for June was 3.0%, expected was 3.1% and previous 4.0%. Next FOMC meeting is 25/26 July. I think they still do a 0.25% rate hike, but then maybe pause for good, well until cuts start next year. Nasdaq100 special rebalance to cut the 'Magnificent Seven' to "address over concentration in the index by redistributing the weights." Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla are the magnificent seven. They account for 55% of the index. Effective close 21 July Done twice previously; December 1998 and May 2011. The combined weight of the five stocks with the largest market caps will be set to 38.5%, currently it is 46.7%. Nasdaq100 is a modified market capitalisation index. So market capitalisation is not the only consideration, albeit is the biggest contributor. Overall this has already seen some selling in the big five, and buying in those that are expected to be weighted higher. Final weightings will be announced after close in Friday 14 July. The Four Horsemen of

Two-pot system is confirmed, here all the details Starts 1 March 2024 All future reg28 and pension contributions will be split into two pots One third savings Two thirds investments You can withdraw the savings component before retirement Tax still payable Existing funds will convert automatically into the new two-pot system Of existing funds R25,000 will be transferred into the savings pot Concerns about everybody taking out their R25,000 and crashing the market are over done. Simon Shares Top ETFs so far in 2023, so +50% returns in just six months. New-vehicle sales in SA +14% for June. But last year June Toyota Durban was still closed after flooding. But still a decent number. Pep (owned by Pepkor) has started offering credit to customers, they own Capfin so have experience in lending. China will control exports of some metals used in the semiconductor industry. Gallium and germanium are considered “minor metals.” They're not rare but costly to produce and China supplies ±80% SARB says fight to

SA Inc watch list. Building a list of stocks that are cheap, very cheap, and could give good return n the next year or three. Criteria; Must be profitable, so positive PE ratio Must be cheap, so PE below 8x Small as in market cap under R8billion No REITs Using Koyfin I get 46 stocks including REITs and detail them in the podcast. I'll create a watchlist on Google docs and share that link in time. What about just the mid cap ETF from FNB? FNBMID. Sixty stocks but problem is the top holdings are; Sibanye-Stillwater*, Discovery*, Nedbank, Bidvest and Remgro. That's already ±25% of the ETF and none really for my requirements as above. Simon Shares Local crypto exchange, Revix, suspends trade or withdrawals on 24% of client crypto assets as their South Korean partner has issues with a provider. Naspers (JSE code: NPN) & Prosus (JSE code: PRX) plan to remove the complex web of cross holdings to a simple structure whereby Naspers owns 47% of Prosus who owns the stake in Tencent (Hong Kong code: 700). Good I